App Inc plans to issue preferred stock with a perpetual annual dividend of 10% of par value and a par value of $25. If the required return on this stock is currently 8%, what should be the preferred stock’s market value? $28.50 $33.50 $37.25 $50.00 $31.25

Definition Definition Type of stock which is granted priority over dividend distributions as compared to common stockholders. Preferred stocks also do not carry any voting rights. Notably, in a case where a company is going to be liquidated, preferred stockholders have a priority claim on the value of assets of the company as quoted in the balance sheet, as compared to the common stockholders.